Aug. 15 (Bloomberg) -- Singapore Telecommunications Ltd.
Chief Executive Officer Chua Sock Koong considered partnerships
and the sale of the company’s Australian satellite unit before
deciding this week to invest further in the business.

Southeast Asia’s biggest phone company was seeking more
than A$2 billion ($1.8 billion) for the Optus Satellite unit,
which provides television, radio, phone, Internet data and
military signals to Australia, New Zealand and the Antarctic,
people familiar with the matter said last month.

“The objective of the strategic review was to see if there
were other options, whether it’s through further investments,
through divestments, partnerships,” Chua said in a Bloomberg
Television interview yesterday. “The outcome of the review is
that it would create the most value if we continue to keep the
business and to invest in the business.”

The decision to keep the satellite unit came after a review
of the asset since March. Investment into the unit, bought as
part of the $9.69 billion takeover of Australia’s Optus in 2001,
comes as SingTel plans a new satellite launch in the next 12
months. Optus, the country’s second-biggest phone company,
accounts for about two-thirds of SingTel’s revenue.

“The satellite business is always something that helps
diversify your revenues, and it gives you exposure to the
broadcasting industry in Australia and New Zealand,” said
Kelvin Goh, an analyst at CIMB Securities in Kuala Lumpur, who
rates the stock neutral. The key concern is the effect of a
stronger Singapore dollar on earnings from markets such as
Australia, he said.

The Australian dollar has fallen 8.3 percent against the
Singapore counterpart this year.

Rising Earnings

SingTel reported first-quarter profit that beat analysts’
estimates yesterday, helped by cost cuts at the Optus unit and
higher earnings from associates. Net income rose 7 percent to
S$1.01 billion ($797 million) in the three months to June,
compared with the S$928.7 million average of three analysts’
estimates compiled by Bloomberg.

India’s rupee lost 6.9 percent this year, crimping Bharti
Airtel’s contribution when repatriated, while the Philippine
peso fell 2.6 percent. The Indonesian rupiah also weakened
against the Singapore currency, while the Thai baht climbed.

Raising Cash

SingTel shares fell 1.3 percent to S$3.76 at the Singapore
close, the lowest since July 10. The decline pared the gain this
year to 14 percent, compared with a 1.7 percent advance in the
Singapore benchmark Straits Times Index.

Divesting Optus Satellite would have helped finance the S$2
billion of acquisitions that SingTel is planning to expand its
digital operations, a target reiterated by Chua yesterday. She
didn’t give further details on the satellite unit review.

SingTel also considered an initial public offering of the
unit after drawing lower-than-expected bids, people with
knowledge of the process said last week.

“To SingTel’s management, they feel that it’s a strong and
attractive business,” said Jonathan Koh, an analyst at UOB Kay-Hian Research in Singapore, who rates the stock hold. “The
margins are very high but the direct synergies are very
minimal.”

Optus Satellite attracted bidders including Intelsat SA,
the Luxembourg-based commercial satellite operator, people
familiar with the matter said Aug. 9. A group that included
Measat Global Bhd., TPG Capital and Blackstone Group LP dropped
out of bidding and signaled to SingTel that it wasn’t willing to
pay more than $1.7 billion, according to a person with knowledge
of the deliberations.

Broadcast Market

“The satellite business is a very successful business,
very profitable business and serves the broadcast market in
addition to the telecoms market,” Chua said, without giving
specific financial details of the satellite unit.

In March, SingTel said it was considering options for Optus
Satellite. It hasn’t reported separate earnings figures for the
unit since the 2001 takeover.

With five spacecraft in orbit, Optus Satellite broadcasts
signals to more than 2 million Australian households and
companies with plans to launch a sixth satellite. Its customers
include state-owned Australian Broadcasting Corp., the Foxtel
joint venture between Telstra Corp. and News Corp., and
Australia’s Department of Defence.

“We had over the last few years already renewed our
satellite fleet,” Chua said. “We have another satellite that
would be launched within the next 12 months. Obviously with the
new satellite planned, we’ll be looking at further services that
we can offer with the satellite.”